Examining the reasons behind project failure
For two decades or more there has been extensive research into trying to discover the reasons behind the question “Why do projects fail?” It might surprise you then, that a recent global study by the Project Management Institute (PMI), has found that project failures are on the increase, despite all those thousands of studies.
In this blog post I’ll look at the PMI study, assess the reasons why projects fail and consider ways to reduce project failures in your business.
The cost of project failure
The PMI study, its latest annual Pulse of the Profession global survey of trends in 2016 project management found that compared to 2015:
- more projects are failing;
- organisations waste an average of 12% of project cost due to poor project performance; and
- financial waste on projects has increased by around 12% year-on-year.
Why do projects fail?
The PMI study uncovers a trend that certainly concerns project managers and should concern C-level executives in all organisations. Increasingly, projects are overrunning on budgeted costs and time estimates. In fact, nearly every measurement of project success has gone backwards since 2012. This is a strong indication that there is something inherently wrong in the system of project management and control.
In this regard, the PMI study does more than simply roll out a bunch of numbers, statistics, and demoralising metrics. It points you firmly in the direction of the cause of the cost and time overruns that lead us to class a project as failed:
- Every measurement of project success is being trashed by scope creep.
What is scope creep, and how is it caused?
Simply put, scope creep is the phenomenon whereby the client increases the aims of a project or the work that has to be done to move toward project completion. Scope creep naturally increases costs and time to complete.
It could be argued that strong project management will resist such scope creep – but what if it is something that is essential, to the project’s final success. For example, let’s say that a project has been initiated to build a bottling plant. It has been costed and work has begun. Then senior management drop the bombshell that bottles need to go through an extra stage in the sterilisation process. This extra demand requires extra work, time, and cost. That’s cope creep.
The project manager cannot resist this change: it simply has to go ahead. Perhaps, then, the solution is to employ a project manager with the experience to understand and question the scope of the project before it is fully costed?
Four simple strategies to reduce project failure
Here are four simple strategies to control your projects better and reduce failure rates. If you can achieve this, then there will be a definite positive impact on your bottom line. Your employees will become better engaged (no more mutterings of “What are we doing now?”). Success breeds success.
1. Hire a strong project manager
Make sure that the project manager and project teams you employ has the relevant industry experience to make your project a success. If they don’t ask plenty of questions, then they probably don’t understand project complexity.
2. Make sure your managers scope the project correctly
Go through the project scope with a fine tooth comb. Have all contingencies been covered? This isn’t a case of reviewing what has been included in the project scope initially, but rather considering what isn’t included. Ask yourself a lot of “what ifs?” Only when executive management has exhausted all possibilities will the project scope be completed.
3. Make sure the project manager uses the right contracts
Your project manager should have the knowledge and experience of using contracts in the project management context. Different types of contracts will be used for different objectives, and the more complex a project the more likely it is that it will require more than one type of contract.
4. Your project manager will properly administer contracts
Contract administration is one f the most important aspects of project management. The project manager will:
- Measure performance against established standards
- Ensure open lines of communication throughout
- Make certain that works, products, goods, and services meet all the requirements as laid out in the contract
Proper contract administration is mission critical to project success.
Do these four things, and you will drastically reduce the chances of project failure. However, to give your projects the greatest chance of success, you should also work hard to create a continuous project culture. Next time I’ll explore how to develop a continuous project culture to boost project success.